We understand that this might be seen as an insensitive blog while people around us are suffering and even dying from COVID 19, but part of our job is to ensure that our clients are fully organised and prepared for the bad things life delivers, as well as the joy and happiness.
That is why we want to stress the importance (possibly even more so now) of ensuring that your wills are up to date and you have completed your Lasting Powers of Attorney.
If you are confident that everything is in order, then you can congratulate yourself for being in only 35% of the British public having made a will and less than 20% who have Powers of Attorney.
If these legal issues are still outstanding, then you (and/or your loved ones) can expect some or all of the following problems:
No Will?
When a person dies without leaving a valid will, their property (the estate) must be shared out according to certain rules. These are called the rules of intestacy. A person who dies without leaving a will is called an intestate person and the highlights of the Intestacy rules are as follows:
Partners
Only married or civil partners and some other close relatives can inherit under the rules of intestacy. Married partners or civil partners inherit under the rules of intestacy only if they are actually married or in a civil partnership at the time of death.
So if you are divorced or if your civil partnership has been legally ended, you can’t inherit under the rules of intestacy.
If there are surviving children, grandchildren or great grandchildren of the person who died and the estate is valued at more than £250,000, the partner will inherit:
- all the personal property and belongings of the person who has died, and
- the first £250,000 of the estate, and
- half of the remaining estate.
If there are no surviving children, grandchildren or great-grandchildren, the partner will inherit:
- all the personal property and belongings of the person who has died and
- the whole of the estate with interest from the date of death.
If couples own property/assets jointly and/or have joint bank or building society accounts, the surviving partner will automatically inherit the property/asset and money. NB: If property is owned as tenants in common this will NOT be the case.
Children
Children of the intestate person will inherit if there is no surviving married or civil partner. If there is a surviving partner, they will inherit only if the estate is worth more than a certain amount.
Children – if there is no surviving married or civil partner
If there is no surviving partner, the children of a person who has died without leaving a will inherit the whole estate. This applies however much the estate is worth. If there are two or more children, the estate will be divided equally between them.
Children – if there is a surviving partner
If there is a surviving partner, a child only inherits from the estate if the estate is valued at over £250,000. If there are two or more children, the children will inherit in equal shares:
- one half of the value of the estate above £250,000.
All the children of the parent who has died intestate inherit equally from the estate. This also applies where a parent has children from different relationships.
A child whose parents are not married or have not registered a civil partnership can inherit from the estate of a parent who dies intestate. These children can also inherit from grandparents or great-grandparents who have died intestate.
Adopted children (including step-children who have been adopted by their step-parent) have rights to inherit under the rules of intestacy. But otherwise you have to be a biological child to inherit.
Children do not receive their inheritance immediately. They receive it when they:
- reach the age of 18, or
- marry or form a civil partnership under this age.
Until then, trustees manage the inheritance on their behalf.
Other close relatives
Parents, brothers and sisters and nieces and nephews of the intestate person may inherit under the rules of intestacy. This will depend on a number of circumstances:
- whether there is a surviving married or civil partner
- whether there are children, grandchildren or great grandchildren.
- in the case of nephews and nieces, whether the parent directly related to the person who has died is also dead
- the amount of the estate.
Who cannot inherit
The following people have no right to inherit where someone dies without leaving a will:
- unmarried partners (sometimes wrongly called ‘common-law’ partners)
- lesbian or gay partners not in a civil partnership
- relations by marriage
- close friends
- carers
If there are no surviving relatives
If there are no surviving relatives who can inherit under the rules of intestacy, the estate passes to the Crown.
If you haven’t made a Will yet – and want to do this urgently, you can write your wishes down and leave these in a safe place. This isn’t usually recommended, but these are very unprecedented times.
To be a valid and legal Will, certain conditions have to be met – including amongst other key things – your signature being witnessed by two people (at a distance!).
You can find these details about the requirements of making the document valid and legal from Citizens Advice here or the Money Advice Service here
No Lasting Powers of Attorney?
A Lasting Power of Attorney (LPA) is a legal document that lets you appoint one or more people (known as ‘Attorneys’) to help you make decisions or to make decisions on your behalf. This gives you more control over what happens to you if, for example, you have an accident or an illness.
Many people think that if something happens to them in the future and they can’t make their own decisions about issues such as finances, property, healthcare or personal care, for example, their family or friends can simply take over. This isn’t the case!
Just as you need to make a will to determine what will happen to your assets when you die, you need to put a Lasting Power of Attorney in place if you want to make the decision yourself as to what will happen to you if you lose mental capacity. There are two types of Power of Attorney to deal with different aspects of your life – property and affairs and personal welfare.
It is a good idea to grant a Lasting Powers of Attorney to someone you trust, so they can act on your behalf if you are no longer able to make decisions at the time they need to be made. This might be because you have lost your mental capacity and/or because you are in a coma after an accident or a stroke etc.
This can be especially important if you hold joint assets with a partner, as the assets may not be able to be sold without the consent of the Court of Protection which could lead to considerable financial hardship for them and you, until their deputyship is processed and granted by the Court of Protection. This is a laborious and costly process whereas LPAs are relatively inexpensive to set up
There are two links that we recommend: The HMRC option is free but can get confusing whereas ECL provides a guided service.
HMRC – https://www.gov.uk/power-of-attorney/make-lasting-power
ECL – https://www.ecl-power-of-attorneys-online.co.uk/ – It costs £60 for each Power if done together and there is help on their website to assist with any queries.
If you lose your mental capacity at the time a decision needs to be made, and you haven’t granted Powers of Attorney to anyone (or you did appoint Attorneys, but they can no longer act for you), then the Court can appoint someone to be your Deputy. Anyone over 18 can apply to become your Deputy, providing nobody objects to their application, and they have the necessary financial skills if they’ve applied to be a ‘property and financial affairs’ Deputy.
If there’s a one-off decision to be made that you’re incapable of making, a Deputy can apply to the Court of Protection for a one-off order to make it for you.
It’s important to note that a Deputy’s powers are very limited compared to someone who has been appointed with Powers of Attorney, and there is an annual fee (up to £2,500) for them to renew their Deputyship.
We believe it is important that you appoint Attorneys who you trust to understand and carry out your wishes when it comes to your money and your personal care and that you discuss your wishes with them in detail or at least write these down for them.
That’s enough of the doom and gloom! We hope you are keeping well and happy but do encourage to think about the above if you haven’t already.
The Team at Magenta is always happy to speak to you at this difficult time if you just want to chat to someone or if you have any concerns.